What happens if the purchase price of the Cream franchise transfer adversely affects the transferee's fulfillment of Development Rights?
Cream Franchise · 2025 FDDAnswer from 2025 FDD Document
- (3) you provide us executed versions of any documents executed by you (or your owners) and transferee (and its owners) to effect the transfer, and all other information we request about the proposed transfer, and such transfer meets all of our requirements, including terms, closing date, purchase price, amount of debt, and payment terms, and we have determined that the purchase price and other terms of the transfer will not adversely affect the transferee's fulfillment of your Development Rights;
Source: Item 23 — RECEIPTS (FDD pages 61–192)
What This Means (2025 FDD)
According to Cream's 2025 Franchise Disclosure Document, Cream must determine that the purchase price and other terms of the transfer will not adversely affect the transferee's fulfillment of your Development Rights. This is a condition for Cream to approve a transfer of the franchise.
In practical terms, this means that if you are looking to transfer your Cream franchise, the franchisor will scrutinize the financial aspects of the deal to ensure the new franchisee has the financial capacity to meet the development schedule outlined in the area development agreement. This includes assessing the purchase price, the amount of debt the transferee is taking on, and the payment terms of the transfer. Cream wants to ensure that the transferee is not financially strained to the point where they cannot fulfill the obligations to open new Cream locations as agreed upon in the development schedule.
This provision protects Cream's interests by ensuring continued growth and adherence to the development plan. For a prospective transferee, this highlights the importance of presenting a solid financial plan as part of the transfer application. For the seller, it underscores the need to structure the deal in a way that does not jeopardize the transfer's approval due to concerns about the buyer's financial stability and ability to meet development obligations.